Markit adds base metals to valuations tool

London-based Markit has added valuations for base metals derivatives traded in London to its Totem service. Until now, its commodity valuation service covered a range of energy contracts and precious metals.

Markit said the largest participants in base metals derivatives have joined the service, which provides risk managers and product controllers with independent verification of mark-to-market levels. The company added that recent increases in metal prices had led to strong client demand for verification of skews in option volatility smiles.

“Not only is it a useful tool for valuing skew, but it also enables us to value maturities outside those quoted on exchange, two areas where information has not previously been available,” said Dmitri Musienko, associate director of commodities product control at Barclays Capital.

Totem also provides pricing for forwards on aluminium, copper, nickel, zinc, lead and tin, which Markit said had much longer maturities than those listed on the London Metal Exchange and Comex.